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West Virginia Won’t Back Down On Arbitration Decision

The saga of Brown v. Genesis Healthcare Corporation continues.  Almost exactly a year ago, the West Virginia Supreme Court declared that arbitration agreements in pre-dispute nursing home contracts were unenforceable.  Then in February SCOTUS reversed that decision and remanded the case for consideration of un-preempted unconscionability.   Now, the West Virginia court has issued its decision on remand.  Brown v. Genesis Healthcare Corp., ___ S.E.2d ___, 2012 WL 2196090 (W.Va. June 13, 2012) (Brown II). 

On remand, the West Virginia court was a bit more tactful in its discussion of SCOTUS’s analysis of the FAA than it was the first time around (but it repeated its description of the case law as “tendentious”, which the web tells me means “having a definite bias”).  West Virginia does think SCOTUS should have given a more reasoned reversal, though, commenting that the Court did not “eludicat[e] how and why the FAA applies to negligence actions that arise subsequently and only incidentally to a contract containing an arbitration clause.” 

Even so, it tried to narrow the impact of SCOTUS’s reversal of  Brown I.  It identified three holdings from Brown I and clarified that only the second of those was overruled (the one saying the FAA was not intended to apply to pre-dispute arbitration agreements in personal injury cases).  The West Virginia court did not change its mind, however: “we otherwise reaffirm all of our discussion and holdings in Brown I.” 

Perhaps in an effort to shore up its ability to later find the nursing home contracts unconscionable, the West Virginia remanded to the lower courts for further development of the record.  In doing so, it gave the plaintiffs a roadmap, noting that it might find the following attributes lead to procedural and substantive unconscionability: age, literacy and sophistication of the parties, how complex or hidden the contract terms were, the context of the contract formation, the ability to negotiate the contract, the bilaterality of the arbitration agreement, and whether arbitration costs are so high as to deter a plaintiff from pursuing a claim.

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